According to a new study recently released by Upgraded Points, airlines increased their baggage fees an average of 8.6 percent over the previous year. The largest baggage revenue increase was Alaskan Airlines, by 40 percent.
The study explored the growing rate of U.S. airlines’ baggage fees and the amount of revenue generated from those fees. It ranked airlines based on the amount of fees levied, their rate of increase, and the overall airline income percentage those fees represent. In addition, the study also explored average fees paid by customers.
Customers of Spirit Airlines paid $26.61 on average for baggage fees and come out as the most expensive airline for such fees. Conversely, Southwest Airlines customers paid just $0.36 on average to travel with their luggage!
Some 19% of Spirit Airlines revenue is generated from baggage fees charged to travelers. Southwest Airlines on the other hand, does not charge for a carry-on or the first two checked bags, and thus generated under 1% of their revenue from baggage fees.
“We’ve all noticed that baggage fees have increased over the years; you feel the financial pinch every time you check-in to fly,” said Upgraded Points Founder Alex Miller. “But I think people will be shocked to learn just how much revenue those fees actually create for airlines. We’re talking a record $5.1 billion in baggage charges, just in the past year alone.”
The study looked at current data released by the Bureau of Transportation Statistics (BTS) for the year spanning April 2018 to March 2019 and calculated the percentage of increase from the previous year based on known rate increases from carriers like United Airlines, Delta Air Lines and American Airlines.
Some other individual breakdowns demonstrated dramatic baggage-fee increases:
• Sun Country: 91.9 percent
• Spirit: 27.3 percent
• Allegiant: 11.9 percent
• Southwest: 7.2 percent
In general, baggage fees make up 3 percent of the overall operating revenue for all airlines, though some airlines rely on this revenue more heavily than others. For instance, while Spirit, Frontier and Allegiant are among the lowest-cost carriers, baggage-fees make up far more of their revenue than much larger carriers: 19, 16 and 14 percent respectively. Spirit Airlines generates the highest percentage of revenue from baggage fees because their customers pay the most in such fees. While Southwest charges the least in fees and do not charge for carry-ons, allowing passengers to check up to two bags for free.
Who Made the Most from Baggage Fees?
American Airlines generated the most revenue in total from baggage fees, probably because they charge much larger fees relative to other carriers, while also showing a significant volume of passengers.
American Airlines netted over $1.2 billion in baggage fees for the year. It is the largest U.S. airline in terms of domestic routes, in addition to having raised its fees from $25 to $30 for the first checked bag and $35 to $40 for the second.
United Airlines took in $933 million gained in baggage income, coming in a close second for most fees gained from baggage charges. In addition to raising its fees, United is one of the main promoters of the basic economy fare, accounting for higher checked-baggage fees overall.
Complete study results available HERE.